Expert group calls for reform of insolvency laws and social attitudes to bankruptcy

A recent report on bankruptcy in Europe assesses how insolvency laws impact on the survival of businesses.

Background

The report 'Restructuring, Bankruptcy and a Fresh Start', published in September 2003, provides insights into the main factors which save businesses from bankruptcy and which motivate entrepreneurs to pick themselves up after a failure and make a fresh start.

The report was carried out for the Commission by experts from current and future Member States and Norway. It assesses the ways in which national bankruptcy laws impact on ailing businesses and provides external advice on up-to-date and predictable insolvency law to encourage settlements as well as a clear legal distinction between fraudulent and non-fraudulent bankruptcies.

The study also examines the effects of legislation on social attitudes and the motivation and ability of entrepreneurs to try again after a bankruptcy. If the legal consequences of bankruptcy are too severe, they can deter entrepreneurs from starting afresh. Moreover, insolvency law can influence society's views about failure and stigmatisation.

The study comes at a time of insolvency law reform in various European countries. The UK, Spain and Norway have all recently restructured their bankruptcy legislation while a review is underway in Finland, Italy and Portugal.

 

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